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Study Guide Exam 1

by: elenaspeake

Study Guide Exam 1 ACCT 2037

Accounting 2037
Carl Prestigiacomo

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About this Document

Terms and extra things besides equations that you need to know for the exam
Accounting 2037
Carl Prestigiacomo
Study Guide
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This 3 page Study Guide was uploaded by elenaspeake on Wednesday September 16, 2015. The Study Guide belongs to ACCT 2037 at University of Missouri - Columbia taught by Carl Prestigiacomo in Fall 2014. Since its upload, it has received 40 views. For similar materials see Accounting 2037 in Accounting at University of Missouri - Columbia.


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Date Created: 09/16/15
Finance 2000 Test 1 Study Guide Chapters 13 CHAPTER 1 Sole Proprietorship business owned by one person Advantages Easiest to start Least regulated Single owner keeps all of the profits Taxed once as personal income Disadvantages Limited to life of owner Equity capital limited to owner s personal wealth Unlimited liability Difficult to sell ownership interest Partnership business owned by two or more persons Advantages Two or more owners More capital available Relatively easy to start Income taxed once as personal income Disadvantages Unlimited liability general partnership can take more than half when partners split must be able to trust partner limited partnership can only take half Partnership dissolves when one partner dies or wishes to sell Difficult to transfer ownership Corporation a legal person distinct from owners and a resident of a state Advantages Limited liability Unlimited life Separation of ownership and management Transfer of ownership is easy Easier to raise capital Disadvantages Separation of ownership and management agency problem Double taxation income taxed at the corporate rate and then dividends taxed at personal rate While dividends paid are not tax deductible What should be the goal of a corporation 0 Maximize the current value per share of the company s existing stock 0 Maximize the market value of the existing owners equity Raise the stock price as much as possible The Agency Problem 0 Agency relationship Principal hires an agent to represent its interests Stockholders principals hire managers agents to run the company 0 Agencv Droblem Con ict of interest between principal and agent 0 Management goals and agency costs CHAPTER 2 Assets 0 Short term Current Assets Life of less than 1 year Converts to cash Within 12 months 0 Long term Fixed Assets Tangible or intangible Has a relatively long life Liabilities 0 Short term Current Liabilities Life of less than 1 year Must be paid Within the year 0 Long term Long Term Liabilities A loan that Will be paid off in 5 years Bonds and bondholders Net Income Revenue Expenses Working Capital short term assets short term liabilities 0 Net Capital Spending ending net FA beg Net FA depreciation Depreciation noncash item Marginal Tax Rate amount of tax payable on the next dollar earned Average Tax Rate the percentage of your income that goes to pay taxes Operating Cash Flow EBIT Depreciation taxes CHAPTER 3 Standardized Financial Statements Commonsize balance sheets Easy to read and compare All accounts percent of total assets TA Common size income statements Tells us What happens to each dollar in sales All line items percent of sales or revenue SLS Standardized statements are useful for Comparing financial information year to year Comparing companies of different sizes particularly Within the same industry


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